Marqeta Inc. shares have taken a beating just lately, shedding practically two-thirds of their worth over the previous 12 months.
Now, Wolfe Research analyst Darrin Peller sees a risk-reward steadiness that’s “too compelling” to miss.
He upgraded shares of the card-issuing firm
MQ,
to outperform from peer carry out Monday, writing that the market appears to be “underappreciating” Marqeta’s enterprise, with the inventory buying and selling at about 1 occasions enterprise worth to estimated fiscal 2024 gross revenue.
“While some investors may be sidelined pending [near-term] uncertainties, at this price, we see these events as catalysts for clarity & upside during ’23,” Peller wrote.
Block Inc. represents greater than half of the gross revenue for Marqeta, which powers Block’s Cash Card, and the looming contract renewal between the 2 represents a serious overhang this 12 months for Marqeta’s inventory, he mentioned. But “[r]enegotiations with [Block] should act as a catalyst” for Marqeta shares, he reasoned.
“While contract terms are unclear, we’re confident that a deal will be struck by the end of ’23,” he wrote, partially as a result of the companies “are mutually beneficial.”
Elsewhere, Peller appears quite a few positives. For one, he mentioned, Marqeta practically broke even on the premise of free money circulate final 12 months, and the corporate has “[m]ultiple avenues such as credit and embedded finance drive longer-term growth along with a higher margin profile.”
Additionally, Marqeta’s enterprise outdoors of Block has been robust, he famous, as the corporate touches on areas like expense administration and the gig financial system.
Marqeta shares have been 10% greater as of Monday’s noon motion.
Source web site: www.marketwatch.com
